Hurco's Balance Sheet Will Carry It Through These New Headwinds

I had been more bearish, or at least more cautious, than a lot of analysts regarding the outlook for manufacturing stocks in 2020 given the still-weak underlying end-market trends and the prospects of election year disruptions, but I certainly didn’t have the huge Covid-19 impact in my models. With the pandemic impacting economic activity around the globe, investors find themselves in what is basically an “all bets are off” environment when it comes to manufacturing equipment companies like Hurco (HURC).

Hurco’s strong balance sheet is likely its best asset today, as the company’s strong net cash position will help it push on through this unexpected new headwind. Although a downturn on par with fiscal 2009 (when revenue dropped by more than half) isn’t my base-case assumption yet, the company could survive that and demand will eventually recover in key markets like Germany, the U.S., and Italy. I certainly can’t promise that there’s no more downside at this level, but Hurco has navigated tough times before and I expect it will do so again.

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Hurco's Balance Sheet Will Carry It Through These New Headwinds